I. _State Socialism and English Economics._

State socialism has been described by M. Leon Say as a German philosophy which was natural enough to a people with the political history and habits of the Germans, but which, in his opinion, was ill calculated to cross the French frontier, and was contrary to the very nature of the Anglo-Saxons. Sovereign and trader may be incompatible occupations, as Adam Smith a.s.serts, but in Germany, at least, they have never seemed so.

There, Governments have always been accustomed to enter very considerably into trade and manufactures, partly to provide the public revenue, partly to supply deficiencies of private enterprise, and partly, within more recent times, for reasons of a so-called "strategic"

order, connected with the defence or consolidation of the new Empire.

The German States possess, every one of them, more Crown lands and forests, in proportion to their size, than any other countries in Europe, some of them, indeed, being able to meet half their public expenditure from this source alone; and besides their territorial domain, most of them have an even more extensive industrial domain of State mines, or State breweries, or State banks, or State foundries, or State potteries, or State railways, and their rulers are still projecting fresh conquests in the same direction by means of brandy and tobacco monopolies. But in England things stand far otherwise. She has sold off most of her Crown lands, and is slowly parting with, rather than adding to, the remainder. She abolished State monopolies in the days of the Stuarts, as instruments of political oppression, and she has abandoned State bounties more recently as nurses of commercial incompetency. She owes her whole industrial greatness, her manufactures, her banks, her shipping, her railways, to some extent her very colonial possessions, to the una.s.sisted energy of her private citizens. England has been reared on the principle of freedom, and could never be brought, M. Say might not unreasonably conclude, to espouse the opposite principle of State socialism, unless the national character underwent a radical change. And yet, while he was still writing, he was confounded to see signs, as he thought, of this alien philosophy obtaining, not simply an asylum, but really an ascendancy in this country. It appeared to M. Say to be striking every whit as strong a root in our soil and climate as it had done in its native habitat, and he is disposed to join in the alarm, then recently sounded at Edinburgh by Mr. Goschen, that the soil and climate had changed, that the whole policy, opinion, and feeling of the English people with respect to the intervention of the public authority had undergone a revolution.

Mr. Goschen had, in raising the alarm, shown some perplexity how far to condemn the change and how far to praise it, but he was quite clear upon its reality, and was possessed by a most anxious sense of its magnitude and gravity. "We cannot," said he, "see universal State action enthroned as a principle of government without misgiving." Mr. Herbert Spencer took up the cry with more vehemence, declaring that the age of British freedom was gone, and warning us to prepare for "the coming slavery." M.

de Laveleye, who is unquestionably one of the most careful and competent foreign observers of our affairs, followed Mr. Spencer, and although, being himself a State socialist, he welcomed this alleged new era as much as Mr. Spencer deprecated it, he gave substantially the same description of the facts; he said, England, once so jealous for liberty, was now running ahead of all other nations on the career of State socialism. And that seems to have become an established impression both at home and abroad. The French Academy of Moral and Political Sciences has devoted several successive sittings to the subject; the eminent German economist, Professor Na.s.se, has discussed it--and with much excellent discrimination--in an article on the decline of economic individualism in England; and it is now the current a.s.sumption of the journals and of popular conversation in this country, that a profound change has come over the spirit of English politics in the course of the present generation--a change from the old trust in liberty to a new trust in State regulation, and from the French doctrine of _laissez-faire_ to the German doctrine of State socialism.

But this a.s.sumption, notwithstanding the currency it has obtained and the distinguished authorities by whom it is supported, is in reality exaggerated and undiscriminating. While marking the growing frequency of Government interventions, it makes no attempt to distinguish between interventions of one kind and interventions of another kind, and it utterly fails to recognise that English opinion--whether exhibited in legislative work or economic writings--was not dominated by the principle of _laissez-faire_ in the past any more than in the present, but that it really has all along obeyed a fairly well-defined positive doctrine of social politics, which gave the State a considerable concurrent _role_ in the social and industrial development of the community. The increasing frequency of Government interventions is in itself a simple and unavoidable concomitant of the growth of society.

With the rapid transformations of modern industrial life, the increase and concentration of population, and the general spread of enlightenment, we cannot expect to retain the political or legislative inactivity of stationary ages. As Mr. Hearn remarks, "All the volumes of the statutes, from their beginning under Henry III. to the close of the reign of George II., do not equal the quant.i.ty of legislative work done in a decade of any subsequent reign." ("Theory of Legal Duties and Rights," p. 21.) The process has been continuous and progressive, and it suffered no interruption in the period which is usually supposed to have been peculiarly sacred to _laissez-faire_. On the contrary, that period will be found to exceed the period that went before it in legislative activity, exactly as it has in turn been itself exceeded by our own time. On any theory of the State's functions, an increase in the number of laws and regulations was inevitable; it was only part and portion of the natural growth of things; but such an increase affords no evidence, not even a presumption, of any change in the principles by which legislation is governed, or in the purposes or functions for which the power of the State is habitually invoked. A mere growth of work is not a multiplication of functions; to get a result, we must first a.n.a.lyze the work done and discriminate this from that.

Now, in the first place, when compared with other nations, England has been doing singularly little in the direction--the distinctively socialistic direction--of multiplying State industries and enlarging the public property in the means of production. Munic.i.p.alities, indeed, have widened their industrial domain considerably; it has become common for them to take into their own hands things like the gas and water supply of the community which would in any case be monopolies, and their management, being exposed to an extremely effective local opinion, is generally very advantageous. But while local authorities have done so much, the central Government has held back. Many new industries have come into being during the present reign, but we have nationalized none of them except the telegraphs. We have added to the Post-Office the departments of the Savings Bank and the Parcels Post; we have, for purely military reasons, extended our national dockyards and arms factories since the Crimean war, but without thereby enhancing national confidence in Government management; we have, for diplomatic purposes, bought shares in the Suez Ca.n.a.l; we have undertaken a few small jobs of testing and stamping, such as the branding of herrings; but we are now the only European nation that has no State railway; we have refrained from nationalizing the telephones, though legally ent.i.tled to do so; and we very rarely give subventions to private enterprises. This is much less the effect of deliberate political conviction than the natural fruit of the character and circ.u.mstances of the people, of their powerful private resources and those habits of commercial a.s.sociation which M. Chevalier speaks of with so much friendly envy, complaining that his own countrymen could never be a great industrial nation because they had no taste for acquiring them. In the English colonies, where capital is more scarce, Government is required to do very much more; most of them have State railways, and some--New Zealand, for instance--State insurance offices for fire and life. These colonial experiments will have great weight with the English public in settling the problem of Government management under a democracy, and if they prove successful, will undoubtedly influence opinion at home to follow their example; but as things are at present, there is no appearance of any great body of English opinion moving in that direction.

But while England has lagged behind other nations in this particular cla.s.s of Government intervention, there is another cla.s.s in which she has undoubtedly run far before them all. If we have not been multiplying State industries, we have been very active in extending and establishing popular rights, by means of new laws, new administrative regulations, or new systems of industrial police. In fact, the greater part of our recent social legislation has been of this order, and it is of that legislation M. de Laveleye is thinking when he says England is taking the lead of the nations in the career of State socialism. But that is nothing new; if we are in advance of other nations in establishing popular rights to-day, we have been in advance of them in that work for centuries already. That peculiarity also has its roots in our national history and character, and is no upstart fashion of the hour. Now, without raising the question whether the rights which our recent social legislation has seen fit to establish, are in all cases and respects rights that ought to have been established, it is sufficient for our present purpose to observe that at least this is obviously a very different cla.s.s of intervention from the last, because if it does not belong to, it is certainly closely allied with, those primary duties which are everywhere included among the necessary functions of all government, the protection of the citizen from force and fraud. To protect a right, you must first establish it; you must first recognise it, define its scope, and invest it with the sanction of authority. With the progress of society fresh perils emerge and fresh protections must be devised; the old legal right needs to be reconstructed to meet the new situation, or a new right must be created hitherto unknown perhaps, unless by a.n.a.logy, to the law. But even here the novelty lies, not in the principle--for all right is a protection of the weak, or ought to be so--but in the situation alone; in the rise of the factory system, which called for the Factory Acts; in the growth of large towns, which called for Health and Dwellings Acts; in the extension of joint-stock companies, which called for the Limited Liability Acts; in the monopoly of railway transportation, which called for the regulation of rates; or in the spread of scientific agriculture, which required the const.i.tution of a new sort of property, the property of a tenant-farmer in his own unexhausted improvements.

This peculiarity of the industrial and social legislation of England has not escaped the acute intelligence of Mr. Goschen. Mistrustful as he is of Government intervention, Mr. Goschen observes with satisfaction that the great majority of recent Government interventions in England have been undertaken for moral rather than economic ends. After quoting Mr.

Thorold Rogers' remark, that these interventions generally had the good economic aim of preventing the waste of national resources, he says: "But I believe that certainly in the case of the Factory Acts, and to a great extent in the case of the Education Acts, it was a moral rather than an economic influence--the conscientious feeling of what was right rather than the intellectual feeling of ultimate material gain--it was the public imagination touched by obligations of our higher nature--which supplied the tremendous motive-power for pa.s.sing laws which put the State and its inspectors in the place of father or mother as guardians of a child's education, labour, and health." ("Addresses,"

p. 62.)

The State interfered not because the child had a certain capital value as an instrument of future production which it would be imprudent to lose, but because the child had certain rights--certain broad moral claims--as a human being which the parents' natural authority must not be suffered to violate or endanger, and which the State, as the supreme protector of all rights, really lay under a simple moral obligation to secure. Reforms of this character are naturally inspired by moral influences, by sentiments of justice or of humanity, by a feeling that wrong is being done to a cla.s.s of the community who are placed in a situation of comparative weakness, inasmuch as they are deprived--whether through the force of circ.u.mstances or the selfish neglect of their superiors--of what public opinion recognises to be essential conditions of normal human existence. Now, most of the legislation which has led Mr. Goschen to declare that universal State action is now enthroned in England has belonged to this order. It has been guided by ethical and not by economic considerations. It has been employed mainly in readjusting rights, in establishing fresh securities for just dealing and humane living; but it has been very chary of following Continental countries in nationalizing industries. When therefore Mr. Spencer tells M. de Laveleye that the reason why England is extending the functions of her Government so much more than other nations "is obviously because there is great scope for the further extension of them here, while abroad there is little scope for the further extension of them," his explanation is singularly inappropriate.

England has not been extending the functions of Government all round, but she has moved in the direction where she had less scope to move, and has stood still in the direction where she had more scope to move than other countries. And it is important to keep this distinction in mind when we hear it so often stated in too general terms that we have discarded our old belief in individual liberty and set up "universal State action" in its place.

But those who complain of England having broken off from her old moorings, not only exaggerate her leanings to authority in the present, but they also ignore her concessions to authority in the past. English statesmen and economists have never entertained the rigid aversion to Government interference that is vulgarly attributed to them, but with all their profound belief in individual liberty they have always reserved for the Government a concurrent sphere of social and economic activity--what may even be designated a specific social and economic mission. A few words may be usefully devoted to this English doctrine of social politics here, not merely because they may serve to dispel a prevailing error, but because they will furnish a good vantage-ground for seizing and judging of a principle of government which is to-day in every mouth, but unfortunately bears in every mouth a different meaning--the principle of State socialism.

It is commonly believed that the English doctrine of social politics is the doctrine of _laissez-faire_, and our economists are continually reviled as if they sought to leave the world to the play of self-interest and compet.i.tion, unchecked by any ideas of social justice or individual human right. But in truth the doctrine of _laissez-faire_ has never been held by any English thinker, unless, perhaps, Mr. Herbert Spencer. Mr. Spencer's first work, "Social Statics," was an exposition of the theory that the end of all government was the liberty of the individual, the realization for every citizen of the greatest amount of liberty it was possible for him to enjoy without interfering with the corresponding claims of his fellow-citizens. The individual had only one right--the right to equal freedom with everybody else, and the State had only one duty--the duty of protecting that right against violence and fraud. It could not stir beyond that task without treading on the right of some one, and therefore it ought not to stir at all. It had nothing to do with health, or religion, or morals, or education, or relief of distress, or public convenience of any sort, except to leave them sternly alone. It must, of course, renounce the thought of bounties and protective duties, but it must also give up marking plate, minting coin, and stamping b.u.t.ter; it must take no part in building harbours or lighthouses or roads or ca.n.a.ls; and even a town council cannot without offence undertake to pave or clean or light the streets under its jurisdiction. It is only fair to say that Mr. Spencer refuses to be bound now by every detail of his youthful theory, but he has repeated the substance of it in his recent work, "The Man _versus_ The State,"

which is written to prove that the only thing we want from the State is protection, and that the protection we want most of late is protection against our protector.

This theory is certainly about as extreme a development of individualism as could well be entertained; and though it has been even distanced in one or two points by Wilhelm von Humboldt--who objected, for example, to marriage laws[7]--no important English writer has ventured near it. The description of the State's business as the business of protecting the citizens from force and fraud, has indeed been familiar in our literature since the days of Locke, and isolated pa.s.sages may be cited from the works of various political thinkers, which, if taken by themselves, would seem to deny to the State any right to act except for purposes of self-protection. John Stuart Mill himself speaks sometimes in that way, although we know, from the chapter he devotes to the subject of Government interference in his "Principles of Political Economy," that he really a.s.signed to the State much wider functions.

When we examine the writings of English economists and statesmen, and the principles they employ in the discussion of the social and industrial questions of their time, it seems truly strange how they ever came to be credited with any scruple on ground of principle to invoke the power of the State for the solution of such questions when that seemed to them likely to prove of effectual a.s.sistance.

The social doctrine which has prevailed in England for the last century is "the simple and obvious system of natural liberty" taught by Adam Smith; but the simple and obvious system of natural liberty is a very different thing from the system of _laissez-faire_ with which it is so commonly confounded. Its main principle, it is true, is this: "Every man," says Smith, "as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into compet.i.tion with those of any other man or order of men. The Sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient: the duty of superintending the industry of private people and of directing it towards the employments most suitable to the interests of the society." ("Wealth of Nations," book iv., chap. ix.) But while the Sovereign is discharged from an industrial duty which he is incapable of performing satisfactorily, he is far from being discharged from all industrial responsibility whatsoever, for Smith immediately proceeds to map out the limits of his functions as follows: "According to the system of natural liberty, the Sovereign has only three duties to attend to--three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence or invasion of other independent societies; second, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and thirdly, the duty of erecting and maintaining certain works and certain public inst.i.tutions which it can never be for the interest of any individual or small number of individuals to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society."

The State is required to protect us from other evils besides the evils of force and fraud--infectious diseases, for example, are in the context mentioned expressly--and to supply us with many other advantages besides the advantage of protection. Some of these advantages are of a material or economic order, and others of an intellectual or moral. The material advantages consist for the most part of provisions for facilitating the general commerce of the country--such things as roads, ca.n.a.ls, harbours, the post, the mint--or provisions for facilitating particular branches of commerce; and among these he instances the incorporation of joint-stock companies endowed by charter with exclusive trading privileges; and the reason which, according to Smith, ent.i.tles the State to intervene in this cla.s.s of cases, and which at the same time prescribes the length to which its intervention may legitimately go, is that individuals are unable to do the work satisfactorily themselves, or that the State has from its nature superior qualifications for the task.

The intellectual or moral advantages which Smith asks from the State are mostly provisions for sustaining the national manhood and character, such as a system of compulsory military training or a system of compulsory--and if not gratuitous, still cheap--education; and it is important to mark that he asks for these measures, not on the ground of their political or military expediency, but on the broad ground that cowardice and ignorance are in themselves public evils, from which the State is as much bound, if it can, to save the people, as it is bound to save them from violence or fraud. Of military training he observes: "To prevent that sort of mental mutilation, deformity, and wretchedness which cowardice necessarily involves in it from spreading themselves through the great body of the people, would deserve the serious attention of Government, in the same manner as it would deserve its most serious attention to prevent a leprosy or any other loathsome and offensive disease, though neither mortal nor dangerous, from spreading itself among them, though perhaps no other public good might result from such attention besides the prevention of so great a public evil."

("Wealth of Nations," book v., chap. i.) And he proceeds to speak of education: "The same thing may be said of the gross ignorance and stupidity which in a civilized society seems so frequently to benumb the understanding of all the inferior ranks of people. A man without the proper use of the intellectual faculties of a man is, if possible, more contemptible than even a coward, and seems to be mutilated and deformed in a still more essential part of the character of human nature. Though the State was to derive no advantage from the instruction of the inferior ranks of people, it would still deserve its attention that they should not be altogether uninstructed." Compulsory military training and a system of national education would no doubt be conducive to the stricter ends of all government; the one would strengthen the defences of the nation against foreign enemies and the other would tend to the diminution of crime at home; but Smith, it will be seen, explicitly refuses to take that ground. The State's duty in the case would be the same, though no such results were to follow, for the State has other duties to perform besides the maintenance of peace and the repression of crime. It would probably be admitted, he thinks, that it was as inc.u.mbent on the State to take steps to arrest the progress of a "mortal and dangerous" disease as it was to stop a foreign invasion; but he goes further, and contends that it was equally inc.u.mbent on the State to arrest the progress of a merely "loathsome and offensive" disease, for the simple reason that such a disease was a mutilation or deformity of our physical manhood. And just as the State ought to prevent the mutilation and deformity of our physical manhood, so the State ought to prevent the mutilation and deformity of our moral and intellectual manhood, and was bound accordingly to provide a system of military training and a system of popular education, to prevent people growing up ignorant and cowardly, because the ignorant man and the coward were men without the proper use of the faculties of a man, and were mutilated and deformed in essential parts of the character of human nature. At bottom Smith's principle is this--that men have an original claim--a claim as original as the claim to safety of life and property--to all the essential conditions of an unmutilated and undeformed manhood, and that is really only another expression for the principle that lies at the foundation of all civil and human right, that men have a right to the essential conditions of a normal humanity, to the presuppositions of all humane living, to the indispensable securities for the proper realization of our common vocation as human beings. The right to personal liberty--to the power of working for ends of our own prescribing, and the right to property--to the power of retaining what we have made, to be the instrument of further activities for the ends we have prescribed for ourselves--rest really on no other ground than that the privileges claimed are essential conditions of a normal, an unmutilated and undeformed manhood, and it is on this broad ground that Adam Smith justifies the State's intervention to stop disease and supply education.

Smith held but a poor opinion of the capacities of Government management, and especially of English Government management, which, he a.s.serted, was characterized in times of peace by "the slothful and negligent profusion that was natural to monarchies," and in times of war by "all the thoughtless extravagance" that was peculiar to democracies; but nevertheless he had no hesitation in asking Government to undertake a considerable number of industrial enterprises, because he believed that these were enterprises which Government with all its faults was better fitted to conduct successfully than private adventurers were. On the other hand, Smith entertained the highest possible belief in individual liberty, but he had never any scruple about sacrificing liberty of contract where the sacrifice was demanded by the great moral end of Government--the maintenance of just and humane dealing between man and man. For example, the suppression of the truck system, which is sometimes condemned as an undue interference with freedom of contract, was strongly supported by Smith, who declared it to be "quite just and equitable," inasmuch as it merely secured to the workmen the pay they were ent.i.tled to receive and "imposed no real hardship on the masters--it only obliged them to pay that value in money which they pretended to pay, but did not really pay, in goods." It was only a just and necessary protection of the weaker party to a contract against an oppressive exaction to which, like the apothecary in "Romeo and Juliet,"

his poverty might have consented, but not his will. Precisely a.n.a.logous is Smith's position concerning usury laws. Usury laws are seldom defended now; for one thing, money has become so abundant that the compet.i.tion of lender with lender may be trusted to as a better security for fair and reasonable treatment of borrowers than a Government enactment could provide. But Smith in his day was strongly in favour of fixing a legal rate of interest, because he thought it was necessary to prevent the practice of extortion by unscrupulous dealers on necessitous clients. His views on truck and usury show that he had no sympathy with those who contend that the State must on no account interfere with grown-up people in the bargains they may make, inasmuch as grown-up people may be expected to be quite capable of looking effectively after their own interest. Smith recognised that grown-up people were often in natural circ.u.mstances where it was practically impossible for them to a.s.sert effectively not their interests merely, but even their essential claims as fellow-citizens; and that therefore it was the State's duty to come to the aid of those whose own economic position was weak, and to force upon the strong certain responsibilities--or at least secure for the weak certain broad, positive conditions--which just and humane dealing might demand.

Now, in these ideas about truck and usury, as in the proposals previously touched upon for checking the growth of disease or cowardice or ignorance, is not the principle of social politics that is applied by Smith precisely the principle that runs through our whole recent social legislation--factory, sanitary, and educational--the principle of the State's obligation to secure the people in the essential conditions of all normal manhood? German writers often take Smith for an exponent, if not for the founder, of what they call the _Rechtstaat_ theory--the theory that the State is mainly the protector of right; but in reality Smith's doctrine corresponded pretty closely with their own _Kultur-und-Wohlfahrtstaat_ theory--the theory that the State is a promoter of culture and welfare; and if further proof were wanted, it might be found in the fact that in his doctrine of taxation he departs altogether from the economic principle, which is popularly a.s.sociated with the _Rechtstaat_ idea, and is supposed to be a corollary of it, that a tax is a _quid pro quo_, a price paid for a service rendered, and ought therefore to be imposed on individuals in proportion to the service they respectively receive from the State; and instead of this economic principle he lays down the broad ethical one, that a tax is a public obligation which individuals ought to be called upon to discharge in proportion to their respective abilities. The rich cannot fairly be said to _get_ more good from the State than the poor; they probably get less, because they are better capable of providing for their own defence; but the rich are able to _do_ more good to the State than the poor, and because they are able, they are bound.

Such is the social doctrine of Adam Smith, and it is manifestly no doctrine of rigid individualism, calling out for freedom at any price, or banning all interference with the natural play of self-interest and compet.i.tion. The natural liberty for which the great English economist contended was not the mere ghost of liberty worshipped by Mr. Spencer.

An ignorant man might be free, as an imprisoned man was free, within limits, but he was not free within normal human limits. He had not the use of his mind; he was wanting in an essential part of his manhood.

First make him a man--a whole, complete, competent man, fit for man's vocation--then make him free. There is a common metaphysical distinction between the formal freedom of the will and the material freedom of the will. The drunkard, the lunatic, is formally free, for he exerts his choice, but he is materially enslaved. The difference between liberty according to Mr. Spencer and liberty according to Adam Smith is something a.n.a.logous. The liberty Smith desires is a substantial liberty; it is clothed with a body--a definite body of universal human rights--which the State is bound to realize as it would realize liberty itself. The reason of his difference from the _laissez-faire_ theory of Mr. Spencer, which is so often erroneously attributed to him, is that he takes a much broader and more practical view of the original moral rights of individuals than such ultra-individualists are accustomed to do. While they hold that the State is there only to secure to individuals reality and equality of freedom, he holds it is there to secure them reality and equality of all moral rights. He would supply all alike, therefore, with certain material securities--the material conditions necessary to secure their moral rights with equal completeness,--and he would protect them in the enjoyment of those conditions against the a.s.saults of poverty and misfortune no less than the a.s.saults of murderers and thieves. But beyond this line he would refuse to go; if he stands clearly out in advance of the _laissez-faire_ position of equality of legal freedom, he stands equally clearly far short of the socialistic position of equality of material conditions.

Now this doctrine of the great founder of English political economy has been substantially the doctrine of his successors as well. It would be beyond my present scope to trace the history of the doctrine of social politics through the writings of the whole succession of English economists, nor is it necessary. I shall choose a representative economist from the group who are generally reckoned the most narrow and unsympathetic, who are accused of having shifted political economy off the broader lines on which it had been launched by Smith, who are counted the great idolaters of self-interest and natural law, and the scientific a.s.sociates of the much-abused Manchester school--viz., the disciples of Ricardo. Ricardo himself touches only incidentally on the functions of the State, but he then does so to defend interventions, such as minting money, marking plate, testing drugs, examining medical candidates, and the like, which are meant to guard people against deceptions they are themselves incompetent to detect. Moreover, he was a strong advocate for at least one important extension of the State's industrial _role_--he would establish a National Bank of issue with exclusive privileges; and it is not uninteresting to remember that in his place in Parliament he brought forward the suggestion of a system of Government annuities for the accommodation of working men, which was introduced by Mr. Gladstone half a century later, and has been denounced in certain quarters as that statesman's first step in socialism, and that he was one of a very small minority who voted for a Parliamentary inquiry into the social system of Robert Owen.

But if Ricardo is comparatively silent on the subject, we fortunately possess a very ample discussion of it by one of his leading disciples, J. E. McCulloch. When Ricardo died, James Mill wrote to McCulloch, "As you and I are his two and only genuine disciples, his memory must be a point of connection between us;" and it was on McCulloch that the mantle of the master descended. His "Principles of Political Economy," which may be said to be an exposition of the system of economics according to Ricardo, was for many years the princ.i.p.al textbook of the science, and will still be admitted to be the best and most complete statement of what, in the cant of the present day, is called orthodox political economy. McCulloch, indeed, is more than merely the expositor of that system; he is really one of its founders, the author of one of its most famous dogmas, at least in its current form, the now exploded doctrine of the Wages fund; and of all the adherents of this orthodox tradition, McCulloch is commonly considered the hardest and most narrow. There are economists who are supposed to show a native generous warmth which all the severities of their science are unable to quell. John Stuart Mill is known to have come under St. Simonian influences in his younger days, and to have been fond ever afterwards of calling himself a socialist; and Professor Sidgwick, in our own day, is often credited--and not unjustly--with a like breadth of heart, and in publishing his views of Government interference, he gives them the name of "Economic Socialism."

But in selecting McCulloch, I select an economist the rigour of whose principles has never been suspected, and yet so striking is the uniformity of the English tradition on this subject, that in reality neither Mill nor Mr. Sidgwick professes a broader doctrine of social politics, or goes a step further, or more heartily on the road to socialism than that accredited champion of individualism, John Ramsay McCulloch.

McCulloch's "Principles" contains--from the second edition in 1830 onward to the last author's edition in 1849--a special chapter on the limits of Government interference; and the chapter starts with an explicit repudiation of the doctrine of _laissez-faire_, which was then apparently only beginning to come into vogue in England.

"An idea," says McCulloch, "seems however to have been recently gaining ground that the duty of the Government with regard to the domestic policy of the country is almost entirely of a negative kind, and that it has merely to maintain the security of property and the freedom of industry. But its duty is by no means so simple and easily defined as those who support this opinion would have us to believe. It is certainly true that its interference with the pursuits of individuals has been, in very many instances, exerted in a wrong direction, and carried to a ruinous excess. Still, however, it is easy to see that we should fall into a very great error if we supposed that it might be entirely dispensed with. Freedom is not, as some appear to think, the end of government; the advancement of the public prosperity and happiness is its end; and freedom is valuable in so far only as it contributes to bring it about. In laying it down, for example, that individuals should be permitted, without let or hindrance, to engage in any business or profession they may prefer, the condition that it is not injurious to others is always understood. No one doubts the propriety of a Government interfering to suppress what is or might otherwise become a public nuisance; nor does any one doubt that it may advantageously interfere to give facilities to commerce by negotiating treaties with foreign powers, and by removing such obstacles as cannot be removed by individuals. But the interference of Government cannot be limited to cases of this sort.

However disinclined, it is obliged to interfere in an infinite variety of ways and for an infinite variety of purposes. It must, to notice only one or two of the _cla.s.ses_ of objects requiring its interference, decide as to the species of contract to which it will lend its sanction, and the means to be adopted to enforce true performance; it must decide in regard to the distribution of the property of those who die intestate, and the effect to be given to the directions in wills and testaments; and it must frequently engage itself, or authorize individuals or a.s.sociations to engage, in various sorts of undertakings deeply affecting the rights and interests of others and of society. The furnishing of elementary instruction in the ordinary branches of education for all cla.s.ses of persons and the establishment of a compulsory provision for the support of the dest.i.tute poor are generally also included, and apparently with the greatest propriety, among the duties inc.u.mbent on administration" (p. 262).

He allows State ownership and State management of industrial works, wherever State ownership and management are more efficient for the purpose than private enterprise--in other words, where they are more economical--as in the cases of the coinage, roads, harbours, postal communication, etc. He would expropriate land for railway purposes, grant a monopoly to the railway company, and then subject it to Government control in the public interest; he would impose many sorts of restrictions on freedom of contract, freedom of industry, freedom of trade, freedom of property, and freedom of bequest; and, what is more important, he recognises clearly that with the growth of society fresh interferences of a serious character will be constantly called for, which may in some cases involve the application of entirely new principles, or throw on the Government work of an entirely new character.

For example, he is profoundly impressed with the dangers of the manufacturing system, which he saw growing and multiplying all around him, and so far from dreaming that the course of industry should remain uncontrolled, he even ventures, in a remarkable pa.s.sage, to express the doubt whether it may not "in the end be found that it was unwise to allow the manufacturing system to gain so great an ascendancy as it has done in this country, and that measures should have been early adopted to check and moderate its growth" (p. 191). He admits that a decisive answer to this question could only be given by the economists of a future generation, after a longer experience of the system than was possible when he wrote, but he cannot conceal the gravest apprehension at the preponderance which manufactures were rapidly gaining in our industrial economy. And his reasons are worthy of attention. The first is the destruction of the old moral ties that knit masters and men together.

"But we doubt whether any country, how wealthy soever, should be looked upon as in a healthy, sound state, where the leading interest consists of a small number of great capitalists, and of vast numbers of workpeople in their employment, but unconnected with them by any ties of grat.i.tude, sympathy, or affection. This estrangement is occasioned by the great scale on which labour is now carried on in most businesses; and by the consequent impossibility of the masters becoming acquainted, even if they desired it, with the great bulk of their workpeople.... The kindlier feelings have no share in an intercourse of this sort; speaking generally, everything is regulated on both sides by the narrowest and most selfish views and considerations; a man and a machine being treated with about the same sympathy and regard" (p. 193).

The second reason is the suppression of the facilities of advancement enjoyed by labourers under the previous _regime_. "Owing to the greater scale on which employments are now mostly carried on, workmen have less chance than formerly of advancing themselves or their families to any higher situation, or of exchanging the character of labourers for that of masters" (p. 188). For the majority of the working-cla.s.s to be thus, as he expresses it, "condemned as it were to perpetual helotism," is not conducive to the health of a nation. The third reason is the comparative instability of manufacturing business. It becomes a matter of the most serious concern for a State, "when a very large proportion of the population has been, through their agency, rendered dependent on foreign demand, and on the caprices and mutations of fashion" (p. 192). That also is a state of things fraught with danger to the health of a community. McCulloch always treats political economy as if he defined it--and the definition would be better than his own--as the science of the working of industrial society in health and disease; and he always throws on the State a considerable responsibility in the business of social hygiene; going so far, we have seen in the pa.s.sages just quoted, as to suggest whether a legal check ought not to have been imposed on the free growth of the factory system, on account of its bad effects on the economic position of the labouring cla.s.s. We had suffered the system to advance too far to impose that check now, but there were other measures which, in his opinion, the Legislature might judiciously take in the same interest. It is of course impossible, by Act of Parliament, to infuse higher views of duty or warmer feelings of ordinary human regard into the relations between manufacturers and their workmen; but the State might, according to McCulloch, do something to mitigate the modern plague of commercial crises, by a policy of free trade, by adopting a sound monetary system, by securing a continuance of peace, and by "such a scheme of public charity as might fully relieve the distresses without insulting the feelings or lessening the industry of the labouring cla.s.ses" (p. 192).

As with commercial crises, so with other features of the modern industrial system; wherever they tend to the deterioration of the labouring cla.s.s, McCulloch always holds the State bound to intervene, if it can, to prevent such a result. He would stop the immigration of what is sometimes called pauper labour--of bodies of workpeople brought up in an inferior standard of life--because their example and their compet.i.tion tend to pull down the native population to their own level.

The example he chooses is not the Jewish element in the East End of London, but the much more important case of the Irish immigration into Liverpool and Glasgow; and while he would prefer to see Government taking steps to improve the Irish people in Ireland itself, he declares that, if that is not practicable, then "justice to our own people requires that measures should be adopted to hinder Great Britain from being overrun with the outpourings of this _officina pauperum_, to hinder Ireland from dragging us down to the same hopeless abyss of pauperism and wretchedness in which she is sunk" (p. 422). This policy may be wise, or it may not, but it shows very plainly--what appears so often in his writings--how deeply McCulloch's mind was penetrated with the conviction that one of the greatest of all the dangers from which the State ought to do what it well can to preserve the people, was the danger of falling to a lower standard of tastes and requirements, and thereby losing ambition and industry, and the very possibility of rising again.

"This lowering of the opinions of the labouring cla.s.s with respect to the mode in which they should live is perhaps the most serious of all the evils that can befall them.... The example of such individuals or bodies of individuals as submit quietly to have their wages reduced, and who are content if they get only mere necessaries, should never be held up for public imitation. On the contrary, everything should be done to make such apathy be esteemed discreditable. The best interests of society require that the rate of wages should be elevated as high as possible--that a taste for comforts and enjoyments should be widely diffused, and, if possible, interwoven with national habits and prejudices. Very low wages, by rendering it impossible for increased exertions to obtain any considerable increase of advantages, effectually hinder them from being made, and are of all others the most powerful cause of that idleness and apathy that contents itself with what can barely continue animal existence" (p. 415).

And he goes on to refute the idea of Benjamin Franklin, that high wages breed indolent and dissipated habits, and to contend that they not only improve the character and efficiency of the labourer, but are in the end a source of gain, instead of loss, to the employer. But, although the maintenance of a high rate of wages is so great an object of public solicitude, it was an object which it was, in McCulloch's judgment, outside the State's province, simply because it was outside its power, to do anything directly to promote, because while authority could fix a price for labour, it could never compel employers to engage labour at that price; and consequently its interference in such a way would only end in injury to the cla.s.s it sought to befriend, as well as to the trade of the country in general. Still, McCulloch is far from wishing to repel the State's offices or the offices of public opinion in connection with the business altogether. In the pa.s.sage just quoted he expressly makes an appeal to public opinion for an active interference in a direction where, he believes, its interference might be useful; and as for the action of the State, he approves, for one thing, of the legalization of trades unions, and, for another, of the special instruction of the public, at the national expense, in the principles on which a high rate of wages depend.

In regard to the Factory Acts, while he would have the hours of labour in the case of grown-up men settled by the parties themselves, because he thought them the only persons competent to settle them satisfactorily, he strongly supported the interference of the Legislature, on grounds of ordinary humanity, to limit the working day of children and women, because "the former are naturally, and the latter have been rendered, through custom and the inst.i.tutions of society, unable to protect themselves" (p. 426); and he seconded all Lord Shaftesbury's labours down to the Ten Hours Act of 1847, to which he objected on the ground that it involved a practical interference with all adult factory labour. On the other hand, he was in favour of the principle of employers' liability for accidents in mines and workshops, because there seemed no other way of saving the labourers from their own carelessness, except by making the masters responsible for the enforcement of the necessary regulations (p. 307).

But McCulloch's general position on this cla.s.s of questions is still better exemplified in the view he takes of the State's duty on a matter of great present interest, the housing of the poor. Here he has no hesitation in throwing the princ.i.p.al blame for the bad accommodation of the working-cla.s.ses of that day, for the underground cellar dwellings of Liverpool and Manchester, the overcrowded lodging-houses of London, and the streets of cottages unsupplied with water or drainage, on "the culpable inattention of the authorities." Mr. Goschen vindicates the legitimacy of Government interference with the housing of the people, on the ground that it is the business of Government to see justice done between man and man. When a man hired a house, Government had a right to see that he got a house, and a house meant a dwelling fit for human habitation. The inspection of houses is, according to this idea, only a case of necessary protection against fraud, like the inst.i.tution of medical examinations, the a.s.saying of metals, or the testing of drugs; and protection against fraud is admitted everywhere to be the proper business of Government. McCulloch bases his justification of the intervention on much broader grounds. Government needs no other warrant for condemning a house that is unfit for human habitation but the simple fact that the house is unfit for human habitation, and it makes no difference whether the tenant is cheated into taking the bad house, or takes it openly because he prefers it. In fact, the strongest reason, in McCulloch's opinion, for invoking Government interference in the case at all, is precisely the circ.u.mstance that so many people actually prefer unwholesome houses from motives of economy.

"Such cottages," he says, "being cheap, are always sure to find occupiers. Nothing, however, can be more obvious than that it is the duty of Government to take measures for the prevention and repair of an abuse of this sort. Its injurious influence is not confined to the occupiers of the houses referred to, though if it were, that would be no good reason for declining to introduce a better system. But the diseases engendered in these unhealthy abodes frequently extend their ravages through all cla.s.ses of the community, so that the best interests of the middle and higher orders, as well as of the lowest, are involved in this question. And, on the same principle that we adopt measures to guard against the plague, we should endeavour to secure ourselves against typhus, and against the brutalizing influence, over any considerable portion of the population, of a residence amid filth and disease" (p.

308).

The last clause is remarkable. The State is required to protect the people from degrading influences, to prevent them from being brutalized through the avarice or apathy of others, and to prevent them being brutalized through the avarice or apathy of themselves. It is not what many persons would expect, but here we have political economy, and the most "orthodox" political economy, forcing people to go to a dearer market for their houses, in order to satisfy a sentiment of humanity, and imposing on the State a social mission of a broad positive character--the mission of extirpating brutalizing influences. Yet, expected or not, this is really the ordinary tradition of English economists--it is the principle laid down by Smith of obliging the State to secure for the people an unmutilated and undeformed manhood, to provide for them by public means the fundamental conditions of a humane existence.

McCulloch's position comes out more clearly still in the reasons he gives for advocating a compulsory provision for the able-bodied poor, and a national system of popular education. With regard to the impotent poor, he is content with saying that it would be inhumanity to deny them support, and injustice to throw their support exclusively on the benevolent. A poor-rate is sometimes defended on what are professed to be strictly economical grounds, by showing that it is both less mischievous and less expensive than mendicity; but what strikes McCulloch is not so much the wastefulness of private charity in the hands of the benevolent as the injustice of suffering the avaricious to escape their natural obligations. Few, however, have much difficulty in finding one good reason or another for making a public provision for the impotent poor; the crux of the question of public a.s.sistance is the case of the able-bodied poor. A provision for the able-bodied poor is practically a recognition in a particular form of "the right to labour,"

and the right to labour resounds with many revolutionary terrors in our English ears, although it has, as a matter of fact, been practised quietly, and most of the time in one of its most pernicious forms, in every parish of England for nearly three hundred years.

Now on this question McCulloch was a convert. He confessed to the Committee on the State of the Poor in Ireland, in 1830, that he had changed his views on the subject entirely since his previous evidence in 1825. He had formerly been, he said, "too much imbued with mere theory, with the opinions of Malthus and Townsend"; but he had become a firm believer in the necessity and the public advantage of a legal provision for the able-bodied poor, and he strongly recommended the introduction of such a system into Ireland, in the first instance as an instrument of individual relief, but also as an effectual engine of social improvement. He gives the reasons for his conversion partly in his evidence, and partly in a more systematic form in his "Principles of Political Economy." First, Malthus had attributed to the Poor Law itself effects which really sprang from certain bad arrangements that had been engrafted on the English system of relief, but were not essential to it--viz., the allowance system, and the law known as Gilbert's Act, which deprived parishes of the right to refuse relief except in workhouses, and forced them to provide work for paupers, if paupers desired it, at or near their own houses. These two arrangements, in McCulloch's opinion, converted the English provision for the able-bodied poor from what we may term a wise and conditional right of labour into an unwise and dangerous one. In the second place, he had come to see that a legal provision for the poor, instead of having, as was alleged, a necessary tendency to multiply pauperism, had in reality a natural tendency to prevent its growth, because it gave the landlords and influential ratepayers a strong pecuniary as well as moral interest in producing that result. Its effect was thus to establish in every parish a new local stimulus to social improvement, and it was on account of this effect of a Poor Law that McCulloch thought it would be specially beneficial to Ireland, because there was nothing Ireland needed more than just such a local stimulus. In the third place, he had become more and more profoundly impressed with the increasing gravity of the vicissitudes and fluctuations of employment to which English labourers were subject since England became mainly a manufacturing country, and that unhappy feature of manufacturing industry was his princ.i.p.al reason for invoking legislative a.s.sistance. A purely agricultural country, he thought, might be able to do without a Poor Law, because agricultural employment was comparatively steady; but in a manufacturing country a Poor Law was indispensable, on account of the long periods of depression or privation which were normal incidents in the life of labour in such a country, and on account of the pernicious effect which these periods of privation would, if unchecked, be certain to exercise upon the character and habits of the labouring cla.s.ses, through "lowering their estimate of what is required for their comfortable and decent subsistence."

("Political Economy," p. 448.)

"During these periods of extraordinary privation the labourer, if not effectually relieved, would imperceptibly lose that taste for order, decency, and cleanliness which had been gradually formed and acc.u.mulated in better times by the insensible operation of habit and example, and no strength of argument, no force of authority, could again instil into the minds of a new generation, growing up under more prosperous circ.u.mstances, the sentiments and tastes thus uprooted and destroyed by the cold breath of penury. Every return of temporary distress would therefore vitiate the feelings and lower the sensibilities of the labouring cla.s.ses" (p. 449).

McCulloch quotes these words from Barton, but he quotes them to express his own view, and their teaching is very explicit on the duty of Government to the unemployed in seasons of commercial distress. In such seasons of "extraordinary privation" the State is called upon to take "effectual" measures--extraordinary measures, we may infer, if extraordinary measures were necessary--for the relief of the unemployed, not merely to save them from starvation, but to prevent them from losing established habits of "order, decency, and cleanliness"; from getting their feelings vitiated, their sensibilities impaired, so that they were in danger of remaining content with a worse standard of living, and sinking to a lower scale in the dignity of social and civilized being.

In a word, it is held to be the duty of the State to prevent, if it can, the temporary reverses of the labouring cla.s.s from resulting in its permanent moral decadence; and as the object of the State's intervention is to preserve the dignity, the self-respect, the moral independence and energy of the labouring cla.s.s, the manner of the intervention, the choice of actual means and steps for administering the relief, must, of course, be governed by the same considerations. "The true secret of a.s.sisting the poor," says McCulloch, borrowing the words of Archbishop Sumner, "is to make them agents in bettering their own condition, and to supply them, not with a temporary stimulus, but with a permanent energy"

(p. 475).

The same principles come out even more strongly in McCulloch's remarks on national education. He says, "the providing of elementary instruction for all cla.s.ses is one of the most pressing duties of Government" (p.

473); and the elementary instruction he would provide would not stop at reading and writing, but would include even a knowledge of so much political economy as would explain "the circ.u.mstances which elevate and depress the rate of wages" (p. 474). It was the duty of Government to extirpate ignorance, because, "of all obstacles to improvement, ignorance was the most formidable"; and it was its duty to establish Government schools for the purpose, because charity schools impaired the self-respect and sense of independence which were themselves first essentials of all social improvement.

"No extension of the system of charity and subscription schools can ever fully compensate for the want of a statutory provision for the education of the public. Something of degradation always attaches to the fact of one's having been brought up in a charity school. The parents who send children to such an inst.i.tution, and even the children, know that they have been received only because they are paupers unable to pay for their education; and this consciousness has a tendency to weaken that state of independence and self-respect, for the want of which the best education may be but an imperfect subst.i.tute. But no such feeling could operate on the pupils of schools established by the State" (p. 476).

There is no question with McCulloch about the right of the State to take steps to forward the moral progress, or to prevent the moral decadence, of the community--or any part of the community--under its care; that is simply its plain and primary duty, though there may be question with the State, as with other agencies, whether particular measures proposed for the purpose are really calculated to effect it.